Benefits February 8, 2005

Most Companies Pay QDRO Fees

February 8, 2005 (PLANSPONSOR.com) - Companies are more likely to pay fees for qualified domestic relations orders (QDRO) rather than dip into retirement plan assets for that expense, according to a new survey.
Reported by

A news release from the Profit Sharing/401k Council of America said its latest QDRO fee poll found that 55.3% of responding companies dipped into corporate assets while 43.7% used plan assets and the remaining 1% split between the two. The group surveyed 103 profit sharing and k plans.

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Among the larger plans (1,000 workers and above), the spread was even greater among those respondents using company accounts and those turning to plan assets. Some 33.3% of companies with 1,000 to 4,999 employees used plan assets versus 66.7% who relied on corporate funds while four in 10 companies with 5,000 or more workers used plan assets and 56% dipped into company money.

The announcement said that in nearly three quarters of the plans surveyed (73.9%), the participant affected by the QDRO paid the fee while all participants in the remaining plans picked up the tab. In the largest plans, the trend toward having all participants make the payments was the most pronounced with 36.4% turning to the individual participant while the remaining 63.6% spread it out among everyone in the plan.

Further, four in 10 respondents said they allow the individuals affected by the QDRO to split the fee with an alternate payee. Just over a third (34.3%) said they used a specialized service provider to help service their QDROs.

Among the responding plans, the median QDRO fee was $400 and ranged from $750 in the smallest plans to $568 at the largest plans.

The survey is at http://www.psca.org/pdfs/qdro2005.asp . A free registration is required.

Compliance February 7, 2005

Pension Fund "Pillager" Draws Nine-Year Sentence

February 7, 2005 (PLANSPONSOR.com) - Daniel S. Geiger, 53, was sentenced to a nine-year sentence last week for taking $6.7 million from the pension funds of now-defunct Standard-Coosa-Thatcher Yarns Inc.
Reported by

>Federal Judge Curtis Collier on Friday afternoon said he was giving a sentence higher than the normal range “to deter other people who would abuse trust like this.”

>The jury also ordered Geiger to forfeit his personal residence, which prosecutors said was bought with $590,000 in pension funds. He also was ordered to forfeit equipment, several vehicles, and a monetary judgment of $781,000.  

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>The company’s former owner and president, Kenneth H. Combs Jr., pleaded guilty in the case to 31 counts of mail fraud, embezzlement, graft, conspiracy to launder money, and money laundering before his suicide just prior to his April 2004 sentencing.   A third man in the indictment, British investor Roderick B. Askew, remains a fugitive, according to the AP.  

>Combs had been indicted in November 2002 on criminal counts involving multiple schemes to recklessly invest the assets of the pension plan. Combs received more than $155,400 in kickbacks from the reckless investments, and also converted pension assets for his personal use.   The two pension plans, which covered 771 participants, lost $11,670,491 as a result of the improper investments.

>Prosecutors have said Geiger bribed Combs, who also was fiduciary of the employee retirement plan, with kickbacks of pension money loaned to or invested in Geiger’s company, USA Mining in California.  

>Prosecutor Gary Humble said Geiger and Kenneth S. Combs had “pillaged” the trust fund, and that there had been testimony in Geiger’s lengthy trial about his getting $669,000 in cash, $71,000 for limousines, $275,000 for chartered planes, and $51,000 for hotels from the pension fund proceeds, according to the Chattanoogan.

>Geiger was convicted after a trial that lasted over two weeks and included some 40 witnesses – mainly defense – of three counts of wire fraud, three counts of kickbacks from an employee pension fund, one count of conspiracy to commit money laundering, and six counts of money laundering.   The prosecutor said the federal Pension Benefit Guaranty Corporation had stepped in to help the SCT pensioners, but he said not all were made whole, including one who lost $100,000.  

>Geiger must begin making restitution at 10% of his earnings when he gets out of prison.   He asked that he be allowed out for 60 days to gather up money to begin the restitution, but the judge rejected that idea.  

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